Friday, 19th April 2019

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The Majors

The European majors continued with their mini-rally on Wednesday. The CAC40 led the way on the day, rising by 0.62%. Not too far behind were the DAX and EuroStoxx600 with gains of 0.43% and 0.10% respectively.

For the current week, the DAX leads the way with a 1.28% gain coming from a 6th consecutive day in the green. The upward momentum has given the DAX a 5.44% rise for the current month, which has only been outgunned by the CSI300. The CSI300 was up by 5.55% for April.

The Stats,

Economic data released through the European session on Wednesday was limited to finalized Eurozone inflation and trade data.

According to figures released by the European Commission, the Eurozone’s trade surplus widened from €1.5bn to €17.9bn in February. Inflation figures were in line with forecasts, with the annual rate of core inflation sitting at 0.8%, well below the ECB target.

The stats had little influence on the day, in spite of the widening in the trade deficit.

A choppy start to the day saw the major bourses fall into the red before rallying through the second half of the day.

Providing support through the day was better than expected economic data out of China. The Chinese economy grew by 6.4%, year-on-year, in the first quarter, which was better than a forecasted 6.3%. Whilst growth for the quarter eased to 1.4%, quarter-on-quarter, the rest of the stats were impressive. Industrial production surged by 8.5% in March, with retail sales jumping by 8.7%.

The stats certainly eased any market jitters over the global economy supported by hopes of the U.S and China nearing an agreement.

Driven by the stats out of China, European banks and autos continued to lead the way. On the DAX, Volkswagen and Daimler were amongst the front runners, gaining 2.95% and 2.30% respectively. From the financial sector, BNP Paribas and Commerzbank gained 1.64% and 1.54% respectively. Deutsche Bank trailed the due, gaining 0.73% on the day.

The European majors managed to avoid a late pullback as the U.S majors struggled following disappointing earnings results from Netflix and IBM.

The Day Ahead

Following 1st quarter GDP numbers and more out of China and trade and inflation figures out of the Eurozone, stats are more regionally specific this morning.

Economic data due out of the Eurozone include flash April private-sector PMI numbers for France, Germany, and the Eurozone.

While the market is unlikely to expect Germany’s manufacturing sector to return to expansion in April, a slower pace of contraction would be needed.

A combination of better than expected economic data out of China and a slower pace of contraction Germany’s manufacturing sector would fuel the current rally.

On the earnings front, American Express is due to release their quarterly earnings. Positive results will likely have a more muted impact on risk sentiment. Economic data out of the U.S later today will be of importance. U.S retail sales and private sector PMI numbers will provide further guidance on how the U.S economy is performing going into the 2nd quarter.

At the time of writing, it was a mixed bag for the futures. The DAX30 was down 19.5 points, while the CAC40 was pointing to a 34 point gain at the open.

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